Challenges in Supply Chain in 2021

 As the demand, environment, taste of consumers are evolving day by day, the modern supply chain also needs to change accordingly to support and balance between the demand and supply and the modern supply chain professionals need to plan and act ahead to manage the value stream flow smoothly. The customer expectations in terms of safety, Quality, delivery and cost, competition in market, international complexities and other factors are creating significant challenges throughout the Supply Chain Network. In this Blog, we will discuss on some of the influencing factors contributing Changes in Supply Chain behavior and in 2021, these are the key factors to work upon.

Change in Customer Behaviors:

The current industrial scenario is providing the choice to the customer that has never been done before. With the invent & pace of industry 4.0, consumers can get millions of option in a single click with all the analytical data readily available. Not only price, the quality and delivery is also critical as per the customer expectation. Every company is struggling to manage the delivery expectation within the cost and excellent quality.

Innovation in Advanced technology:

In the era of industry 4.0, the technology is evolving everyday and the customers are also adopting it rapidly. Therefore, the industries must develop and implement new technologies to sustain the growth. This needs skilled resources as well as installing new softwares, machines which, in turn, affect the profitability. Therefore, the supply chain needs to generate new ideas and techniques to reduce costs in other areas.

Uncertainty in the flow of Materials and Information:

Change is the only constant parameter and it creates variability and uncertainty in the balance of demand and supply. And the result of this function of variation is Inventory. Now a days, every organization is very much focused to optimize the inventory as it shows the healthiness of the system.

One of the most challenging part of supply chain is to manage optimized Inventory along with the best customer satisfaction, with least lead time and superior quality.

New norms related to Environment:

It’s a well known fact that the impact of industrialization evolution is impacting the environment badly and now the government and society is very much aware to save it. This needs a change in the manufacturing process and global supply chain operations are in the centre when it comes to reduce environmental impact. New BS-VI norms demanded a drastic change in the automobile industry and the supply chain network has done a lot to adopt the same.

Upstream and Downstream risks:

Every contributor in the supply chain flow, the suppliers, logistics, manufactures, dealers, retailers, customers are now spread across multiple locations, countries, time zones and continents. To get all these into a single umbrella requires careful co-ordination and management.

Increase in Operational Expenses and costs throughout the supply chain:

Operating cost is the expense related to the administration and maintenance of any business on day to day basis. This includes overhead and cost of goods sold (COGS).

 The components of operating expenses includes:

>Research & development expenses

>Rent

>Office supply costs

>Repair & Maintenance Expenses

>Salary & Wages

>utility expenses

>Sales & marketing expenses

>Entertainment & Travel expenses

 Whereas the operating cost includes:

>Direct material cost

>Direct Labor

>Maintenance & repair cost related to direct production

>Utility costs directly related to the production

Therefore, the increase cost in all the above components results the profitability of the organization directly. Therefore, the challenging part of supply chain is to manage all these expenses to keep the company profitable market competitive.

 As Supply chain handles the most cost part of a company, the growth and development depends a lot o this pillar. And to sustain in this fast changing environment  also requires the supply chain to be flexible enough so that the organization can meet the customer expectation.